GAZA CITY, Gaza Strip — The Israeli military said late Sunday that an Israeli aircraft targeted at a car in Gaza City, the first such attack since the Islamic militant group Hamas overran Gaza earlier this month. One person was killed and two wounded, hospital officials said.

The attack took place in the eastern part of Gaza City, a known stronghold of Islamic militants.

The airstrike came hours after an Israeli agreement to begin releasing hundreds of millions of dollars in frozen tax funds to Palestinian President Mahmoud Abbas, a gesture to bolster the moderate Palestinian leader in his standoff against Hamas.

Islamic Jihad said the vehicle was carrying its members on a "holy mission," code for an attack on Israel. Hamas TV footage showed the burned car with at least one rocket inside.

Israel has frequently targeted Gaza militants in airstrikes, saying the goal is to prevent daily rocket barrages from Gaza at Israeli border towns.

However, Israel had stayed on the sidelines during this month's lightning Hamas sweep through Gaza, when the Islamist forces overran headquarters of security forces linked to Abbas' rival Fatah.

Summit meant to boost AbbasThe airstrike came a day before a summit meeting in Egypt with Abbas, Israeli Prime Minister Ehud Olmert, President Hosni Mubarak of Egypt and Jordan's King Abdullah II, aimed at boosting Abbas in his conflict with Hamas.

The gathering is meant to give Abbas a high-profile display of support against Hamas.

But Olmert cautioned against high expectations for the summit.

“We have an interest in having this meeting, but I don’t want anyone to think we’re on the brink of a dramatic breakthrough,” Olmert told his Cabinet, according to a meeting participant.

Abbas, however, said he received U.S. and Israeli assurances that Israel was ready to make progress at the summit. The Palestinian president, who met with King Abdullah II in Jordan, said he would ask Israel to free Palestinian prisoners, in addition to easing restrictions at crossing points and releasing the tax money, the official Jordanian news agency Petra reported.

Ismail Haniyeh, the deposed Palestinian prime minister, dismissed the summit as a “mirage,” saying resistance was the only hope for Palestinians.

“The Americans won’t give anything. Israel won’t give us anything. Our land, our nation will not come back to us except with steadfastness and resistance,” a code word for attacks against Israel, he said in Gaza.

The Palestinian infighting has left the Palestinians with two governments — Abbas’ new Cabinet in the West Bank, and the Hamas rulers in Gaza. Israel and moderate Arab leaders have joined to support Abbas and isolate Hamas, a radical group pledged to Israel’s destruction.

$550 million withheldIsrael has withheld some $550 million of Palestinian tax money since Hamas swept Palestinian parliamentary elections in January 2006, saying it feared Hamas would use the money to finance terror attacks. Abbas kicked Hamas out of the Palestinian government after the group took Gaza, clearing the way for a transfer of the money.

Olmert’s spokeswoman, Miri Eisin, said Sunday’s Cabinet vote was a “decision in principle” to release the funds, and that the “exact amount” would be discussed at Monday’s summit and then by the Israeli government.

A Cabinet meeting participant said he expected a “mechanism” for transferring the money to be in place within days. However, he said the money would not begin flowing until Abbas’ new government formally accepts international calls to renounce violence and recognize Israel.

The official, who asked not to be identified under Israeli civil servant rules, said the money would be released gradually to ensure it doesn’t reach Hamas.

Meeting participants said the proposal passed by an overwhelming majority; only two hard-line ministers voted against it.

Without the funds — mostly customs duties that Israel collects on behalf of the Palestinians — the Palestinian government has been unable to pay salaries.

Mohammed Dahlan, a former top Fatah official in Gaza, urged Israel to turn over the money immediately. “This is not a gift,” he said. “This is the Palestinian people’s money, which was stolen by the Israelis.”

Haniyeh said some of the money must be directed to Gaza as well as the West Bank. It “must reach all Palestinian people without discrimination or differentiation,” he said.